Hardly had the ink dried on the final report on online retail platforms in SA than a delegation of business leaders attended a summit this week with President Cyril Ramaphosa and senior ministers and officials to talk about how business might “partner” with the state to better manage the fight for reliable energy, a functioning freight rail system and a crackdown on crime.
The topics are the business choice — there were about 15 CEOs with Ramaphosa on Tuesday. They believe the floppy old strategies of the past, trying to fix everything, might work better with a little focus — needless to say, electricity, rail infrastructure and crime are hot buttons for investors.
It is interesting how the state manages this relationship with business. It routinely refers to the private sector as a social partner but also routinely abuses it. So, just as CEOs were getting ready to put their shoulders to the wheel again for an ANC government, the Competition Commission, a sharp policy weapon in the hands of Ramaphosa’s most trusted cabinet colleague — trade, industry and competition minister Ebrahim Patel — ripped into pretty much all of the private sector’s most recent New Age, digital businesses.
Takealot, a roaring success, is now required, according to the commission, to adjust its business model to be more “fair” to smaller retailers on its site and is required to “do more” to support black businesses joining the site by offering them expertise and financial discounts.
Online stores at Google and Apple will have to favour local app developers with advertising discounts. Booking.com must give financial and logistical support to small black-owned hotels. James Hodge, the economist who chaired the commission of inquiry into abuse of the platforms, said his recommendations aimed to “promote a more inclusive digital economy and [ensure] historically disadvantaged South Africans share in the rewards of a large economy”.
This is the Patel-Ramaphosa songbook. The more it fails, the more we sing from it. We are constantly aiming for “inclusive growth” and then reducing this inclusivity to race alone. But economic inclusivity is an attitude, not a rule, and, where successful, it tends to spring from individual companies with enlightened leadership bringing staff into shareholding, or governments encouraging inclusive behaviour from economic actors by incentivising it.
A decade ago some of SA’s biggest construction firms were forced to take a walk of shame by Patel for tender collusion on the soccer stadiums built for the 2010 World Cup. But has that resulted in a bigger, blacker construction sector? No. In fact, construction in the country is a shadow of its former self. Fighting collusion is necessary, but the state of the industry today goes back directly to the ordeal Patel put the firms through.
In modern ANC SA, inclusivity is imposed and Patel’s hand is always there. He has been using competition policy to drive economic growth since Jacob Zuma first appointed him minister of economic development in 2009. Recent statistics show that manufacturing’s contribution to GDP has fallen for 16 straight years. For 14 of those Patel has been the policy-making genius at the centre of this still-gathering disaster.
But he doesn’t appoint himself. Ramaphosa, always a sucker for a rhetorical flourish that sounds better than it is, holds Patel close. So we had “never let a good crisis go to waste” for the pandemic. As a result of the fevered plans made then, rather than supporting businesses in ways they would have been able to articulate, we have one of the last remaining economies still not recovered.
“Inclusive growth” was going to be the way out of the crisis and even today Ramaphosa invokes it at every turn. But it couldn’t happen then and repetition isn’t going to change it. That’s because Ramaphosa doesn’t mean what he says. What he means is “transformation” — more black businesses, more black economic control. And that’s fine. That’s what he stands for. No need to sugarcoat it.
Once we ditch “inclusive growth” and once those CEOs at the presidential table stop nodding every time he says it, we might get somewhere. So let us call it “transformation and growth” because that is, reasonably, what the government wants. This is helpful because once you remove the adjective “inclusive” from the phrasing, you’re clearly left with two objectives — transformation and growth.
This is not only much harder to say than inclusive growth, it is also harder to do. But “transformation and growth” does us all one huge favour — it forces the government to contemplate the last thing it wants, which is to make a choice. To have just one, and not two, priorities.
The politics of it are tough, especially before an election. But sooner or later the ANC is going to have to choose growth over transformation. It is all very well believing in fairies, but no growth almost guarantees no transformation; and strong growth under strong, liberalising and even inclusive policies would of itself be hugely transformative. It isn’t Covid that prevented growth then, just like it isn’t the absence of electricity now. It is poor and poorly articulated economic policy.
I know none of this will matter much to the CEOs desperate to try to keep some shape to the economy they are obliged to operate in. But it’s important to speak plainly. And to choose wisely.
• Bruce is a former editor of Business Day and the Financial Mail.
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